ibrary 


55\^ 
Bancroft  Librarv 

ARGENTINE   REPUBLIC. 

The  basis  of  Argentine's  Monetary  System  is  the 
gold  standard.  The  unit  is  a  gold  PESO,  divided 
into  100  Centavos,  weighing  1.6129  grammes  of  gold 
.900  fine,  or  say  1.4516  grammes  fine  gold.  Its  par 
value  expressed  in  terms  of  U.  S.  currency  is 
$0.96475.  The  parity  of  $1.00  U.  S.  currency  in 
terms  of.  Argentine  gold  pesos  is  $1.0365. 

The  actual  currency  of  the  Argentine  is  Govern- 
ment notes,  to  which  a  fixed  value  of  44%  of  the 
gold  peso  has  been  assigned  by  the  Government. 
This  parity  of  44%  is  maintained  through  the  me- 
dium of  a  conversion  fund  which  exchanges  gold  for 
paper,  and  vice  versa,  on  the  basis  of  $44.00  gold 
for  $100.00  paper,  or  $227.27  paper  for  $100.00  gold. 

Since,  then,  the  value  of  the  paper  peso  is  fixed 
by  Governmental  decree  and  is  maintained  through 
the  conversion  fund,  the  paper  peso  represents  0.6387 
grammes  of  fine  gold,  and  its  parity  expressed  in 
terms  of  U.  S.  currency  is  $0.4245.  The  parity  of 
$1.00  U.  S.  currency  in  terms  of  Argentine  paper 
pesos  is  $c/l  2.35576.* 

Bills  of  exchange  on  Foreign  countries  are  quoted 
in  both  paper  and  gold,  but  usually  they  are  quoted 
in  gold.  When  Buenos  Aires  quotes  New  York 
exchange  on  the  basis  of  paper  currency,  the  quota- 
tion represents  the  equivalent  in  U.  S.  currency  of 
$1.00  paper  peso;  thus,  42.50  means  that  $0.4250 
U.  S.  currency  is  the  equivalent  of  $1.00  peso,  paper. 
When  Buenos  Aires  quotes  on  the  basis  of  the  gold 
peso,  the  quotation  is  expressed  in  gold  pesos;  thus, 
"New  York  sight  $1.0375"  means  that  $1.0375  Ar- 
gentine gold  pesos  is  equal  to  $1.00  U.  S.  currency. 

While  conditions  were  disturbed  in  the  Argentine 
during  the  early  weeks  of  the  war,  the  exchanges  held 
remarkably  firm  and  quickly  returned  to  more  or  less 

*Note:  The  Sign  $c/l  stands  for  Paper  Currency  and  is  an  abbrevia- 
tion  of  Curso  Legal. 


the  normal  rates.  This  was  due  principally  to  the 
character  of  the  Argentine's  exports,  and  the  urgent 
demand  existing  for  those  products,  consisting  of 
foodstuffs,  hides,  wool,  etc. 

EXCHANGE   RATES. 

The  foreign  exchanges  are  quoted  in  the  Argentine 
as  hereunder  noted: 

London    90  d/s  47-7/8d=$  1.00    Peso    gold 

Pa-is    90  d/s    Francs     5.0325=  1.00  " 

Germany  90  d/s    Marks         4.07=  1.00         "         " 

New  York Sight  U,  S.  Cv.  $1.00=  1.0350      " 


BRAZIL. 

The  Monetary  System  of  Brazil  is  nominally  based 
on  the  gold  standard.  The  MILREIS  is  the  gold 
unit.  It  is  divided  into  1,000  Reis.  It  weighs  0.89645 
grammes  of  gold  .917  fine,  or  say,  .82207  grammes 
of  fine  gold,  and  its  par  value  in  terms  of  U.  S.  cur- 
rency is  $0.5463.  $1.00  U.  S.  currency  is,  therefore, 
the  equivalent  of  f  1$831  gold  milreis. 

The  circulating  medium,  and  the  only  legal  money 
in  Brazil,  consists  of  Government  notes  guaranteed 
redeemable  at  the  rate  of  16d  per  milreis;  this  rate 
being  maintained  through  a  conversion  fund  known 
as  the  Caixa  de  Conversao.  The  theoretical  unit  of 
the  paper  circulation  represents  0.48816  grammes  of 
fine  gold,  and  its  equivalent  in  terms  of  U.  S.  cur- 
rency is  $0.32444.  The  par  value  of  $1.00  U.  S. 
currency  is,  therefore,  3$08226  expressed  in  terms  of 
Brazilian  paper  currency. 

On  receipt  in  Brazil  of  the  news  of  the  declaration 
of  war,  exchange  fell  to  14d.  A  bank  holiday  of 
15  days  was  declared,  specie  payment  was  suspended 
by  the  Caixa  de  Conversao,  and  the  rate  of  exchange 
remained  more  or  less  nominal  at  14d  until  the  banks 
reopened  on  August  18th.  After  that  date,  the  rate 
steadily  declined  until  early  in  October,  when  a  low 
point  of  lOd  was  reached. 

The  principal  factors  in  bringing  about  this  heavy 
decline  were  the  suspension  of  specie  payments  by 
the  Caixa  de  Conversao,  the  closing  of  London 
credits  in  favor  of  Brazil,  and  the  fact  that,  under 
date  of  August  24th,  the  Government  authorized  an 
issue  of  treasury  notes  amounting  to  250,000  contos 
(one  conto=l,000  milreis—1,000  milreis=$308.226 
U.  S.  currency) . 

Since  October,  exchange  rates  have  reacted,  and 
in  the  swing  touched  as  high  as  14%d,  but  they  have 
again  declined  to  the  present  rate  of  12%d. 

fThe   Sign  $   for   Milreis  is   placed   after   the   units   and   before  the 
decimals. 


EXCHANGE   RATES. 

The  method  of  quoting  exchange  rates  in  Brazil 
under  normal  conditions  is  hereunder  noted: 

90  D/S. 

London  16-3/32d=l$000 

Berlin  1  Mark=   .730 

Paris  1  Franc=   .593 

SIGHT. 

London     15-7/8d  =1$000 

Berlin    1  Mark=   .740 

Paris    „ 1  Franc=   .600 

New   York    $1.00  U.  S.  Cy.=3$113 


BOLIVIA. 

The  Monetary  System  of  Bolivia  is  based  on  the 
gold  standard.  The  BOLIVIANO  is  the  theo- 
retical unit.  It  is  divided  into  100  centavos  represent- 
ing 0.63904  grammes  of  gold  .91666  fine  or  say  .58579 
grammes  of  fine  gold  (B  12.50  to  the  £  Sterling). 
Its  par  value  in  terms  of  U.  S.  currency  is  $0.3893, 
and  the  value  therefore  of  $1.00  U.  S.  currency,  ex- 
pressed in  terms  of  Bolivian  currency,  is  Bs  2.5685. 

The  chief  article  of  export  of  Bolivia  is  tin.  Just 
how  important  a  factor  this  item  is  in  relation  to  the 
total  export  trade  is  demonstrated  by  the  fact  that 
of  a  total  export  movement  in  the  year  1912  of  $25,- 
057,841  the  sum  of  $23,432,668  corresponded  to  tin. 
The  greater  part  of  Bolivia's  tin  goes  to  Great 
Britain,  and  with  the  outbreak  of  the  war  this  trade 
was  practically  suspended.  Bolivia  therefore  has 
been  severely  affected  as  a  result  of  the  war. 

The  normal  rate  of  exchange  in  Bolivia  for  90-day 
draft  on  London  fluctuates  around  18l/2cl  per  bolivi- 
ano. This  rate  has  declined  since  August  1st  to  as  low 
as  14%d  per  boliviano,  with  remittances  scarce  and 
difficult  to  procure  even  on  this  basis.  The  quota- 
tions in  Bolivia  for  exchange  on  "New  York  are  more 
or  less  nominal,  even  under  normal  conditions,  and 
vary  from  Bs  2.60  to  Bs  2.80  per  $1.00  U.  S. 
currencv. 

EXCHANGE   RATES. 

The  rates  for  foreign  exchange  as  quoted  normally 
in  Bolivia  are  hereunder  noted: 

90  D/S. 

London 18-l/4d=B  1.00 

Paris  _ Frs.  1.91-3/4=      1.00 

Berlin  „ Mks.  1.55        =      1.00 

SIGHT   DRAFT. 

London    1 18  d  =B  1.00 

Paris    Frs.  1.89        =  1.00 

Berlin     Mks.  1.53-1/2=  1.00 

New  York    U.  S.  Cy.  1.00=  2.75 

NOTE:     The  rate  for  New  York  sight  draft  was  quoted  in   May, 
1915,  at  Bs  3.30=$1.00  U.  S.  currency. 

7 


CHILE. 

Chile  is  nominally  on  a  gold  basis,  but  the  currency 
is  inconvertible  paper,  and  there  is  no  limit  to  the 
fluctuations  which  may  occur  in  the  exchange  quo- 
tations, as  there  is  no  fixed  unit  or  value  as  a  basis 
for  rates.  A  theoretical  unit  exists  in  the  Chilean 
gold  PESO,  which  represents  0.599103  grammes  of 
gold  .91666  fine,  or  say,  0.54918  grammes  pure  gold. 
Its  par  value  in  terms  of  U.  S.  currency  is  $.0365, 
and  its  equivalent  in  British  currency  is  18d.  The 
law  fixing  this  unit,  however,  is  not  in  active  opera- 
tion, and  the  circulation  is  limited  to  Government 
notes,  which  are  normally  quoted  at  rates  fluctuating 
between  9d  and  lid  per  Chilean  paper  peso.  At  the 
present  time  the  rates  fluctuate  in  the  neighborhood 
of  71/od,  thus  showing  a  depreciation  in  the  Chilean 
paper  currency  of  25%  more  or  less. 

The  basis  of  exchange  in  Chile  is  the  90-day  Lon- 
don bill,  which  is  quoted  in  terms  of  pence  per  one 
paper  peso;  thus,  when  the  rate  for  90-day  bills  on 
London  is  quoted  at  lOd,  it  means  that  Chile  receives 
lOd  British  currency  for  each  paper  peso. 

Chile  has  been  severely  affected  by  the  European 
war.  Her  chief  article  of  export  is  nitrate,  which 
finds  its  principal  market  in  Great  Britain  and  Ger- 
many. This  market  being  cut  off  for  the  time  being, 
the  nitrate  business,  which  is  the  heart  of  Chilean 
industrial  and  commercial  life,  has  been  paralyzed. 

RATES   OF   EXCHANGE. 

The  rates  of  exchange  prevailing  in  Chile  before 
the  war  and  the  present  rates  are  hereunder  noted: 

VALPARAISO,  FEB.  7th,  1913. 

London    90  d/s  10  l/32d=$     1.00     Peso  paper 

London    sight  9.7/8d=       1.00         "         " 

Berlin 90  d/s  Marks  85.50=  100.00 

Berlin    sight         "  84.00=  100.00 

Paris    90  d/s  Francs  105.25=  100.00 

Paris    sight         "  103.25=  100.00 

New    York...  90  d/s  U.  S.  Cy.  1.00=      4.99 

New    York...      sight         "  1.00=       5.06 

8 


VALPARAISO, 

London   90  d/s 

London   sight 

Berlin    90  d/s  Marks 

Berlin     sight         " 

Paris   _ 90  d/s  Francs 

Paris   sight         " 

New   York...      sight 


MAY  23d,  1915. 

7-3/4d=$  LOO 
7-5/8d=  1.00 
67.75=  100.00 
66.75=  100.00 
81.25=  100.00 
79.75=  100.00 
$1.00=       6.64 


Peso  paper 


COLOMBIA. 

The  currency  of  Colombia  is  inconvertible  paper 
notes.  The  theoretical  unit  is  the  PESO,  divided  into 
100  centavos.  A  law  was  passed  some  time  ago,  fix- 
ing as  the  unit  a  peso  of  1.5976  grammes  of  gold 
.91666-fine  (one-fifth  of  a  pound  Sterling),  but  this 
law  is  not  in  operation. 

The  value  of  the  paper  currency  for  official  pay- 
ments and  judicial  liquidations  has  been  fixed  by 
law  in  Colombia  in  relation  to  the  pound  Sterling, 
and  in  the  proportion  of  $500  paper  currency  as  the 
equivalent  of  <£l,  or  say,  10,000%.  Since  then  the 
actual  par  of  exchange  is  10,000%,  when  quotations 
vary  from  this  par  they  are  considered  as  at  either  a 
discount  or  a  premium,  as  the  case  may  be.  For 
instance,  if  the  commercial  quotation  for  demand 
draft  on  London  is  expressed  as  10,500%,  this  would 
represent  a  premium  over  par  of  5%,  since  £l  would 
cost  $525.00  pesos  instead  of  $500.00  pesos  the  par 
at  10,000%. 

English  and  American  gold  coin  circulate  freely  in 
Colombia,  and  foreign  exchange  rates  are  frequently 
quoted  in  terms  of  English  and  American  gold,  as 
well  as  in  terms  of  paper  currency. 

The  principal  export  products  of  Colombia  are 
coffee,  hides,  gold,  etc.,  and  shipments  usually  are 
financed  through  the  medium  of  credits.  Shortly 
after  the  war  began,  most  of  these  credits  were  can- 
celled and  business  was  brought  to  a  standstill.  Ex- 
change rates  advanced  to  as  high  as  ll1/2%  above  nor- 
mal, which  means  that  £l  cost  $557.50  pesos  instead 
of  $500.00  pesos  (par),  or  that  $100.00  U.  S.  cur- 
rency cost  $11,150.00  Colombian  paper  pesos. 


10 


EXCHANGE   RATES. 


The  method  of  quoting  exchange  rates  in  Colombia 
is  hereunder  noted : 

Madrid    „ 500  Pesetas, 

Berlin    400  Marks 

Italy    500  Lire 

Paris    500  Francs 

London  £20 

New    York......$100 

NOTE:     At  the  present  time   (April,  1915)   rates  in  Colombia  are 
quoted  at  a  premium  of  about  7%  over  par  or  normal  rates. 


9550%=$  9550. 

Pesos  paper 

9850%=     9850. 

\t             u 

9950%=     9950. 

"         " 

9950%=     9950. 

u              u 

10000%=  10000. 

" 

10250%=  10250. 

«              « 

11 


COSTA  RICA. 

The  Monetary  System  of  Costa  Rica  is  based  on 
the  gold  standard.  The  unit  is  the  COLON,  divided 
into  100  centimos,  and  is  used  only  in  Costa  Rica. 
The  weight  of  the  unit  is  0.7780  grammes  of  .900-fine 
gold,  or  say  0.7002  grammes  of  pure  gold,  which 
gives  it  a  par  value  in  terms  of  U.  S.  currency  of 
$0.46536.  The  par  value  of  $1.00  U.  S.  currency 
expressed  in  terms  of  Costa  Rican  Colones  is 
02.14887.  Under  normal  conditions,  the  commercial 
rate  of  exchange  in  Costa  Rica  for  sight  draft  on 
New  York  fluctuates  between  02.13  and  02.18  per 
$1.00  U.  S.  currency. 

The  circulation  consists  of  banknotes  backed  by 
gold  and  other  assets  of  the  issuing  banks.  Foreign 
gold  coins  are  legal  tender  in  Costa  Rica  at  the 
following  rates: 

American  (U.  S.  Dollar)  =£2. 15 

French    (Franc)  =00.4125 

German    (Mark)  =00.51 

English  (Sovereign)     =010.45 

Foreign  exchanges  are  quoted  in  Costa  Rica  plus 
a  premium.  The  nominal  premium  on  the  U.  S. 
Dollar  is  115%,  which  means  that  $1.00  U.  S.  cur- 
rency is  the  equivalent  of  02.15  in  terms  of  Costa 
Rican  currency. 

When  the  war  broke  out,  its  immediate  effect  on 
the  economic  life  of  Costa  Rica  was  to  cause  an  extra- 
ordinary scarcity  of  drafts  on  foreign  countries  and, 
in  consequence  of  this,  and  the  enactment  of  a  law 
prohibiting  the  export  of  gold,  the  premium  for  for- 
eign remittances  advanced  from  115%  to  180%. 

While  no  legal  moratorium  has  been  decreed  with 
respect  to  the  payment  of  bills  of  exchange,  etc.,  in 
view  of  the  existing  premium  exacted  for  foreign 
remittances,  a  practical  moratorium  is  in  effect  in  so 
far  as  the  settlement  of  foreign  bills  is  concerned. 

The  situation  in  Costa  Rica  has  been  complicated 

12 


by  the  recent  failure  of  the  Banco  Comercial  de 
Costa  Rica.  Some  of  our  merchants  here  in  the 
States  who  passed  their  bills  for  collection  direct  to 
the  bank  referred  to  have  been  caught  in  this  failure 
in  varying  sums.  The  failed  bank  liquidated  with  the 
drawees  of  many  of  the  bills  which  it  held  for  collec- 
tion on  the  basis  of  a  nominal  exchange  rate  and 
credited  the  senders  of  the  drafts  in  special  account 
with  the  proceeds,  in  Costa  Rican  currency,  of  the 
drafts  so  collected.  Credits  accruing  from  the  sums 
thus  collected  and  credited  in  special  account  will 
now  have  to  enter  into  the  general  liquidation. 

Financial  conditions  in  Costa  Rica  are  unsatisfac- 
tory, due  to  the  restricted  market  for  the  export 
products  of  the  country,  and  a  consequent  reduction 
in  its  revenues  through  the  falling  off  of  exports  and 
imports.  With  the  object  in  view  of  relieving  the 
situation,  the  Government  has  authorized  the  estab- 
lishment of  a  new  bank  of  issue,  the  Banco  Interna- 
cional  de  Costa  Rica  which  has  been  empowered  to 
issue  notes  to  the  extent  of  04,000,000.  This  issue  is 
guaranteed  by  6%  bonds  of  the  National  Treasury 
in  the  sum  of  £332,800. 

In  order  to  facilitate  the  circulation  of  the  notes 
issued  by  the  new  bank,  the  Government  has  decreed 
that  all  obligations  which  are  to  be  liquidated  in 
col  ones,  or  in  other  agreed-upon  moneys,  will  enjoy 
the  privilege  of  a  moratorium  until  one  year  after 
the  signing  of  European  peace,  unless  the  creditors 
are  willing  to  accept  payment  in  bills  of  the  Banco 
Internacional  de  Costa  Rica. 

EXCHANGE   RATES. 

Foreign  exchanges  are  quoted  in  Costa  Rica  in 
the  following  manner: 

London    _ sight  112% 

"      -   cable  114% 

New  York  sight  118% 

cable  v  120% 

Paris    _ _ sight  111% 

"        cable  113% 

Berlin   - _ sight  I08y2% 

13 


ECUADOR. 

The  Monetary  System  of  Ecuador  is  based  on  the 
gold  standard.  The  SUCRE  is  the  unit  of  value 
and  is  divided  into  100  centavos.  Its  weight  is  0.8136 
grammes  of  gold  .900  fine,  or  say  0.73224  grammes 
of  pure  gold  (one-tenth  of  a  £  Sterling).  Its  value 
in  terms  of  U.  S.  currency  is  $0.48665,  and  the  value 
therefore  of  $1.00  U.  S.  currency  in  terms  of  Ecua- 
dorean  currency  is  S/  2.05484.  The  actual  currency 
of  the  country  is  gold,  silver  and  banknotes,  but  gold 
is  the  only  legal  tender.  Early  in  August,  the  rate 
of  exchange  on  New  York  advanced  from  S/  2.07^/2 
to  S/  2.11,  and  subsequently  it  advanced  to  S/  2.15. 

According  to  advices,  the  Government  of  Ecuador 
was  rather  heavily  in  debt  to  one  of  the  local  banks, 
and,  after  the  war  started,  there  was  a  run  on  that 
bank,  which  was  stopped  only  by  executive  decree 
suspending  specie  payments. 

The  Banco  del  Ecuador  had  plenty  of  gold  in  its 
vaults  for  the  purpose  of  redeeming  its  own  notes, 
and  refused  to  avail  itself  of  the  decree.  It  publicly 
announced  that  it  would  exchange  gold  for  its  own 
notes,  and  for  a  short  time  quite  a  few  notes  were 
presented  for  redemption.  Public  confidence  in  the 
bank  was  soon  restored,  however,  and  the  gold  ex- 
changed for  notes  began  to  reappear  for  deposit. 

The  fact  of  two  classes  of  notes  circulating,  one 
redeemable  in  gold  and  the  other  non-redeemable, 
gave  rise  to  a  rather  anomalous  situation.  Naturally 
the  notes  of  the  Banco  del  Ecuador  disappeared  from 
circulation,  and  the  only  bills  in  evidence  were  those 
of  the  other  banks.  As  a  logical  result  of  this  condi- 
tion, those  bills  which  could  not  be  exchanged  for 
gold  depreciated  in  value  until  they  were  at  a  dis- 
count of  8%,  more  or  less,  in  relation  to  gold  or  notes 
of  the  Banco  del  Ecuador. 

The  Banco  del  Ecuador  has  continued  selling 
drafts  at  all  times  since  the  beginning  of  the  war  in  ex- 

14 


change  for  its  own  notes  or  gold  at  current  rates  of 
exchange.  Since,  for  the  reason  above  indicated,  gold 
and  their  own  notes  have  disappeared  temporarily 
from  circulation,  it  now  is  necessary  for  the  prospec- 
tive purchaser  of  foreign  remittance  (unless  he  hap- 
pens to  be  the  fortunate  holder  of  gold  or  Banco  del 
Ecuador  notes)  to  pay,  in  addition  to  the  quoted  rate 
for  his  exchange,  the  premium  of  8%,  approximately, 
existing  between  the  depreciated  notes  in  circulation 
and  gold  or  notes  redeemable  in  gold. 

EXCHANGE   RATES. 

The  exchanges  as  quoted  in  Guayaquil  before  and 
after  the  declaration  of  war  are  hereunder  noted : 

BEFORE  AFTER 

England ____.  £1  =S/10.10                                  £1  =S/10.50 

New  York  $1.00  =  2.07 J^                                  $1.00  =  2.15 

France Frs.  5.  =  2.00^4  Frs.      5.  =  2.08 

Switzerland       "     5.  =  2.00^                            "      5.  =  2.08 

Belgium             "     5.  =  2.00^                            "      5.  =  2.08 

Austria            Kr.  5.  =  2.10  Kr.       5.  ==  2.18 

Germany       Mks.  4.  =  1.97  Mks.    4.  =  1.96 

Russia            Rbl.  1.  =  1.07  Rbl.     1.  =  1.11 

Spain               Pts.  5.  =  1.94  Pts.     5.  =  2.04 

Italy                 Lit.  5.  =  2.00  Lit.      5.  =  2.00 

Peru                £p.  1.  =S/10.  £p.     1.  =S/  9.00 

Chile                $ch.  1.  =  0.42  $ch.     1.  =  0.40 

Panama             B.  1.  =  2.07^  B.         1.  =  2.15 


15 


GUATEMALA. 

Guatemala  is  nominally  on  a  silver  standard,  but 
the  present  currency  is  inconvertible  paper,  which 
circulates  freely  in  the  country.  It  has  no  fixed  value 
with  relation  to  gold  or  foreign  exchange. 

In  1870,  the  silver  PESO,  divided  into  100  cen- 
tavos  and  weighing  25.  grammes  of  silver  .900  fine, 
or  say  22.500  grammes  fine  silver,  was  adopted  as 
the  monetary  unit,  and  this,  in  reality,  is  the  unit  of 
account.  At  present,  practically  no  gold  or  silver 
coins  circulate. 

In  1899,  some  $350,000  Pesos,  in  silver,  were  put 
into  circulation,  but  these  quickly  disappeared  in 
consequence  of  the  great  depreciation  in  the  paper 
currency,  which  is  subject  to  unrestricted  fluctuations, 
since  this  currency  is  not  guaranteed  in  any  form  and 
no  provision  has  been  made  for  its  redemption,  either 
in  gold  or  in  silver. 

For  the  purpose  of  calculation  in  Guatemala,  an 
imaginary  or  fictitious  unit — viz.  a  gold  dollar — is 
used.  It  is  the  practice  to  figure  under  this  system 
that  £l  Sterling,  25  Francs,  or  20  Marks  are  the 
equivalent  of  $5.00  gold,  and  exchanges  are  based 
on  these  figures,  plus  the  existing  market  premium, 
which  runs  very  high. 

Under  normal  conditions,  the  exchange  rates  in 
Guatemala  fluctuate  at  from,  say,  1600%  to  2000%. 
With  the  outbreak  of  the  European  war,  conditions 
in  Guatemala  became  acute  and  the  premium  on 
exchange  advanced  to  from  4000%  to  4500%.  Even 
at  these  high  rates  it  was  almost  impossible  to  buy 
foreign  remittances  in  the  market,  owing  to  the 
closing  of  credits  existing  in  favor  of  Guatemalan 
merchants  for  the  financing  of  coffee  operations,  to 
decreased  exports,  etc.,  and  a  consequent  scarcity  of 
bills.  Recently  the  situation  has  improved  slightly, 
and  the  premium  now  exacted  for  foreign  remittance 
is  from  3500%  to  3600%. 

16 


EXCHANGE   RATES. 


The  rates  of  exchange  prevailing  in  Guatemala  be- 
fore the  war  and  at  the  present  time  (May,  1915) 
are  hereunder  quoted: 


Ante 

War 

Present 

Dollars 

2100% 

3500% 

Pounds 

2060% 

3450% 

Francs 

2040% 

3400% 

Pesetas 

1950% 

3400% 

Lires 

2040% 

3425% 

Marks 

1995% 

3250% 

17 


HONDURAS. 

The  Monetary  System  of  Honduras  is  based  on 
the  silver  standard.  The  unit  is  the  PESO,  divided 
into  100  centavos,  and  weighs  25.  grammes  of  silver 
.900  fine,  or  say  22.500  grammes  fine  silver.  With 
silver  at  55  cents  an  ounce  as  a  basis,  the  value  in 
terms  of  U.  S.  currency  of  the  Peso  of  Honduras  is 
$0.39786,  and  the  value  of  $1.00  U.  S.  currency  in 
terms  of  Hondurean  currency  is  $2.5134. 

Under  normal  conditions,  sight  exchange  on  New 
York  is  quoted  in  Honduras  at  a  premium  of  140% 
to  150% ;  which  means  that  the  $1.00  U.  S.  currency 
is  equivalent  to  $2.40  to  $2.50  in  terms  of  Hondurean 
silver. 

According  to  last  advices  from  Tegucigalpa,  the 
Capital  of  Honduras,  the  present  premium  on  New 
York  exchange  is  215%  to  230%;  in  other  words, 
the  equivalent  of  $1.00  U.  S.  currency  in  terms  of 
Hondurean  currency  is  $3.15  to  $3.30  Pesos  and  even 
with  this  increase  in  the  premium  on  New  York  ex- 
change, it  is  difficult  to  secure  New  York  drafts  in 
Honduras. 

Collections  on  Honduras  are  effected  with  diffi- 
culty at  the  present  time  owing  to  the  enhancement 
in  the  value  of  dollars  in  the  form  of  New  York  and 
San  Francisco  drafts. 


18 


MEXICO. 

The  finances  of  Mexico  at  present  are  on  an  incon- 
vertible paper  basis. 

Until  1905,  the  unit  of  value  in  Mexico  was  the 
silver  PESO.  Early  in  that  year,  a  new  monetary 
law  was  put  into  effect,  and  the  gold  standard  was. 
adopted.  The  unit  fixed  under  this  system  was  a 
PESO  divided  into  100  centavos  and  weighing  .8333 
grammes  of  gold  .900  fine,  or  say  .75  grammes  of 
fine  gold,  and  its  par  value  in  terms  of  U.  S.  cur- 
rency was  $0.4985,  the  par  of  $1.00  U.  S.  currency 
in  terms  of  Mexican  currency  being  $2.0062  Pesos. 

Fixed  rates  of  exchange  were  maintained  through 
the  intervention  of  an  Exchange  Commission,  and 
the  system  worked  splendidly  from  the  time  it  was 
put  into  effect  until  the  year  1913.  During  this 
period,  exchange  rates  revolved  within  a  radius  of 
about  1  %  of  par,  discount  or  premium,  and  the  fluc- 
tuations were  never  violent  or  great. 

The  exchanges  continued  on  a  fairly  stable  basis 
until  the  latter  part  of  1913,  and  held  remarkably 
firm,  taking  into  consideration  the  fact  that  Mexico 
had  been  in  a  turmoil  of  revolution  for  three  years, 
or  say  from  November,  1910.  Since  1913,  however, 
conditions  have  grown  rapidly  worse,  and  as  a  result, 
Mexican  currency  has  depreciated  from  its  par  value 
of  $0.4985  U.  S.  currency  to  from  $0.08  to  $0.10  U.  S. 
currency  per  paper  peso.  Even  on  this  depreciated 
basis,  foreign  remittances  are  difficult  to  secure  in 
Mexico,  and  the  tendency  of  the  peso  is  steadily 
downward. 

The  rapid  decline  in  the  value  of  the  peso  is  due 
chiefly  to  the  ^fact  that  during  the  past  eighteen 
months  a  large  volume  of  notes  has  been  issued  by 
the  various  contending  factions.  The  amount  of  this 
paper  (absolutely  unsecured)  which  has  been  forced 
upon  the  country  is  unknown,  but  it  is  estimated  that 

19 


$1,000,000,000  pesos  more  or  less  have  been  issued  up 
to  the  present  time. 

In  view  of  this  flooding  of  the  country  with  incon- 
vertible currency,  it  is  not  surprising  therefore  that 
foreign  exchange  or  gold  has  enhanced  rapidly  in 
value.  The  value  given  to  the  paper  currency  by 
present  rates  as  compared  with  foreign  exchange  is 
exaggerated,  and  a  steady  and  rapid  decline  or  de- 
preciation in  the  value  of  the  Peso  may  be  expected. 
The  continual  state  of  revolution  which  has  had 
Mexico  in  its  grasp  since  December,  1910,  has  com- 
pletely paralyzed  the  industrial  and  economic  life  of 
of  the  republic,  and  today  the  only  fitting  word  to 
describe  the  conditions  existing  in  that  country  is 
chaos. 

Under  normal  conditions,  sight  draft  on  New  York 
in  Mexico  was  quoted  at  $0.4950  to  $0.4990=$1.00 
Mexican  Peso.  As  indicated  above,  the  present  rate 
is  from  $0.08  to  $0.10  U.  S.  currency=$1.00  Mexi- 
can currency. 

EXCHANGE   RATES. 

The  method  of  quoting  exchange  rates  under  nor- 
mal conditions  is  noted  hereunder: 

London  -  sight  24.52  d  =$1.00  Peso 

Paris "  Fes.  2.57  =  1.00     " 

Berlin  "  Mks.  2.09  =  1.00     " 

New  York  "  $  0.4987  U.  S.  Cy.  =  1.00     " 


20 


NICARAGUA 

The  present  Monetary  System  of  Nicaragua  is  the 
gold  standard.  The  unit  is  the  CORDOBA,  divided 
into  100  centavos.  The  weight  of  the  theoretical 
gold  unit  is  1.6718  grammes  of  gold  .900  fine,  or  say 
1.50464  grammes  of  fine  gold,  and  its  value  in  terms 
of  U.  S.  currency  is  $1.00.  The  circulation  consists 
of  silver  coin  and  banknotes  guaranteed  to  be  pay- 
able in  gold. 

Until  three  years  ago,  the  monetary  unit  of  Nica- 
ragua was  the  silver  Peso  with  a  nominal  value  of 
$0,435  in  terms  of  U.  S.  currency.  The  actual  cur- 
rency, however,  was  inconvertible  paper,  and  the  ex- 
change rates  ranged  from  1000%  to  1700%  premium 
for  sight  bills  on  New  York. 

Some  three  years  ago,  certain  New  York  interests, 
through  the  medium  of  the  Banco  Nacional  de  Nica- 
ragua, Inc.,  undertook  to  rehabilitate  the  finances  of 
Nicaragua  and  as  a  result  the  present  monetary  sys- 
tem was  established.  Under  this  system  the  old  paper 
peso  circulation  is  being  retired  at  a  fixed  rate  of 
$12.50  Pesos  per  one  Cordoba. 

Since  the  outbreak  of  the  war,  financial  conditions 
in  Nicaragua  have  become  acute.  During  the  first 
month  of  the  war,  foreign  remittances  were  impos- 
sible to  secure,  save  through  the  medium  of  the 
Banco  Nacional  de  Nicaragua,  which,  under  the  terms 
of  the  present  monetary  law,  was  obliged  to  exchange 
New  York  funds  or  gold  for  Cordobas  at  the  par 
rate  for  U.  S.  gold.  All  the  other  banks  in  Nicaragua 
suspended  the  sale  of  drafts,  and  in  consequence  of 
this  the  Banco  Nacional  was  called  upon  to  carry  the 
heavy  burden  of  supplying  the  entire  demand.  After 
a  short  time,  it  likewise  was  obliged  to  suspend  the 
sale  of  drafts  on  New  York  thus  taking  advantage 
of  a  moratorium  decreed  by  the  Government. 

According  to  last  advices,  certain  of  the  local  banks 

21 


and  export  houses  in  Nicaragua  have  resumed  in  a 
small  way  the  sale  of  New  York  exchange,  but  on  the 
basis  of  a  premium  of  from  20%  to  23%,  with  a 
rising  tendency. 

In  view  of  the  existing  moratorium,  and  of  the 
high  premium  for  exchange  on  New  York,  the  collec- 
tion of  bills  on  Nicaragua  is  very  difficult,  and  delays 
and  evasions  are  to  be  expected. 

RATES  OF  EXCHANGE. 

The  rates  of  exchange  prevailing  in  Nicaragua 
before  the  war  and  the  present  rates  are  hereunder 
noted : 

ANTE-WAR  RATES.    ' 
New  York    $100.  U.  S.  Currency    100.00%    =    Cordobas  100. 
London  ......    £1     Sterling  =  "  4.88 

PRESENT  RATES. 

New  York  $100.  U.  S.  Currency     123.00%    =    Cordobas  123. 
London  £1     Sterling  =  6. 


22 


PANAMA. 

The  Monetary  System  of  Panama  is  based  on  the 
gold  standard.  The  unit  is  the  BALBOA  divided 
into  100  centesimos.  The  theoretical  unit  represents 
1.672  grammes  of  gold  .900-fine,  or  say  1.5046 
grammes  of  pure  gold.  Its  value  expressed  in  terms 
of  U.  S.  currency  is  $1.00.  United  States  currency 
circulates  freely  in  Panama  on  a  par  basis. 

The  Panamanian  currency  circulating  consists  of 
silver  half  balboas  (locally  called  pesos)  and  frac- 
tional silver  and  nickel  coins. 

The  rate  of  exchange  in  Panama  for  New  York 
draft  is: 

Buying   yA%     discount 

Selling    14%     premium 


23 


PARAGUAY. 

The  Monetary  System  of  Paraguay  is  based  on  a 
theoretical  gold  PESO,  (the  Argentine  gold  peso  is 
the  nominal  unit)  weighing  1.6129  grammes  of  gold 
.900  fine,  or  say  1.4516,  but  the  currency  in  circula- 
tion consists  of  inconvertible  notes. 

Practically  no  gold  or  silver  coins  circulate  in 
Paraguay,  the  currency  being  limited  to  the  above- 
mentioned  depreciated  paper,  which  is  quoted  at 
widely  varying  rates,  from  day  to  day,  with  refer- 
ence to  its  former  gold  value  and  with  a  steadily 
declining  tendency. 

No  provision  is  made  for  the  redemption  of  the 
outstanding  notes,  with  the  exception  of  a  small 
volume  of  notes  known  as  Moneda  Nacional  (Na- 
tional Money).  These  notes  are  guaranteed  by  a 
gold  reserve  of  one-tenth  of  the  issue,  and  therefore 
have  a  stable  value  on  that  basis. 

Some  years  ago,  fractions  of  the  paper  peso  in  the 
form  of  nickel  coin  were  placed  in  circulation  by  the 
Government  ,of  Paraguay,  but  the  paper  currency 
depreciated  in  value  so  rapidly  that  the  intrinsic 
value  of  the  nickel  coins  soon  exceeded  their  mone- 
tary value,  and  they  disappeared  from  circulation. 
The  few  Paraguayan  coins  seen  are  in  the  hands  of 
money  changers,  who  sell  them  as  curiosities. 

Exchange  payable  in  gold  and  always  command- 
ing a  high  premium  is  used  in  commercial  transac- 
tions, particularly  in  relation  to  foreign  remittance, 
but  practically  no  gold  coin  is  used  in  internal 
operations. 

Gold  or  foreign  remittance,  today,  commands  a 
premium  of  3500%,  more  or  less,  in  terms  of  Para- 
guayan paper  currency. 

A  moratorium  exists  in  Paraguay,  and  the  collec- 
tion of  bills  on  that  country  is  difficult  under  pres- 
ent conditions. 

24 


PERU. 

The  Monetary  System  of  Peru  is  the  gold  stand- 
ard. The  unit  is  the  Peruvian  pound  (  LIBRA), 
divided  into  ten  soles  of  100  centavos.  It  contains 
7.32238  grammes  of  fine  gold,  the  same  as  the  Eng- 
lish pound,  and  its  par  value  in  terms  of  U.  S.  cur- 
rency is  $4.8665.  British  gold  is  legal  tender  and 
circulates  freely  with  the  Peruvian  pound. 

Under  normal  conditions  no  premium  exists  on 
gold,  since  that  is  the  standard  currency  of  Peru.  A 
premium  is  now  exacted  for  gold,  however,  due  to  a 
recent  issue  of  banknotes  under  Government  authori- 
zation and  also  the  prevailing  exchange  conditions. 

The  news  of  the  declaration  of  war  caused  a  panic 
in  Lima,  the  Capital  and  center  of  commercial  and 
industrial  life  in  Peru.  A  three-day  bank  holiday 
was  declared  and  business  was  brought  to  a  complete 
standstill.  This  was  followed  by  a  moratorium, 
which  is  still  in  effect. 

The  Peruvian  Government,  with  the  idea  of 
remedying  the  local  situation,  authorized  the  banks 
in  Lima  to  issue  circulating  checks  or  notes  to  the 
extent  of  £p2,500,000,  the  issue  to  be  especially 
guaranteed  in  the  form  hereunder  noted: 

Gold      20% 

Mortgage  Securities  30% 

.     Fiscal  Securities  14% 

Drafts  and  Promissory  Notes 36% 

This  issue  has  now  been  completed. 

The  past  experience  of  Peru  with  notes  or  paper 
currency  had  been  disastrous,  and  at  the  first  intima- 
tion of  a  note  issue  the  gold  in  circulation  went  into 
hiding.  The  export  of  gold  was  prohibited,  and  this, 
together  with  a  marked  decrease  in  the  export  of  raw 
products  (copper,  cotton,  sugar,  etc.)  caused  a 
notable  scarcity  of  drafts  on  Europe  and  the  United 

25 


States.  As  a  result  of  this  scarcity  of  bills,  a 
premium  of  from  7%  to  10%  now  is  demanded  for 
foreign  drafts,  and  even  at  this  premium  drafts  for 
foreign  remittance  are  difficult  to  secure. 

EXCHANGE   RATES. 

Hereunder  I  note  the  method  of  quoting  foreign 
exchange  rates  in  Peru  under  normal  conditions: 


90 

d/s 

on 

London 

1/2% 

discount 

M 

« 

« 

Paris 

Fes. 

25.00 

=  £p  1. 

« 

« 

a 

Italy 

Lire 

25.00 

SB    "         1. 

U 

ii 

" 

Spain 

Ptas. 

26.35 

=    "        1. 

(( 

u 

" 

Hamburg 

Mks. 

20.80 

=    "        1. 

80 

« 

«< 

New  York 

$ 

4.79 

a        -1 

8 

« 

« 

<«         <t 

$ 

4.77 

=    "        1. 

26 


SALVADOR 

The  Monetary  System  of  Salvador  is  based  on  the 
silver  standard.  The  unit  is  the  PESO,  divided  into 
100  centavos  and  weighing  25.  grammes  of  silver  .900 
fine,  or  say  22.500  grammes  of  fine  silver.  With  sil- 
ver at  55  cents  an  ounce,  the  par  value  of  the  Peso 
in  terms  of  U.  S.  currency  is  $0.3978,  and  the  value 
of  $1.00  U.  S.  currency  in  terms  of  Salvadorean  cur- 
rency is  $2.51345. 

The  circulation  consists  of  silver  and  bank  notes 
convertible  into  silver  on  demand.  Since  the  out- 
break of  the  European  war,  however,  the  conversion  of 
notes  has  been  suspended  under  Government  author- 
ization. The  banknotes  in  circulation  are  secured  by 
silver  and  other  assets  of  the  issuing  banks. 

Financial  conditions  in  Salvador  have  not  been 
altogether  satisfactory  since  the  end  of  1913,  when 
the  Banco  National  del  Salvador  failed,  causing  a 
run  on  the  other  three  banks  of  issue.  In  conse- 
quence of  the  panic  created  by  this  failure,  the  Gov- 
ernment decreed  a  moratorium  suspending  for  a 
period  of  six  months  the  exchange  of  silver  for  the 
outstanding  bank  notes.  During  the  period  of  this 
moratorium,  the  Salvadorean  banks  were  obliged, 
under  Governmental  decree,  to  bring  up  their  silver 
reserves,  and  as  a  result  of  this,  outstanding  bank 
notes  of  more  or  less  the  value  of  $8,000,000  Pesos 
now  have  metal  reserves  back  of  them  to  the  extent 
of  approximately  $4,000,000  pesos. 

Foreign  exchange  rates  in  Salvador  are  calculated 
on  the  basis  of  the  dollar,  the  sovereign  (£)  being 
considered  as  worth,  nominally,  $5.00,  the  franc  20^ 
and  the  mark  25^.  To  these  figures  is  added  the 
respective  premium  on  gold,  which  under  normal 
conditions  is  about  150% ;  for  example,  the  equiva- 
lent of  $1.00  in  U.  S.  currency  at  exchange  150%  is, 
in  terms  of  Salvadorean  currency  $2.50  pesos. 

Since  the  beginning  of  the  European  war,  com- 

27 


merce  has  been  adversely  affected.  Both  imports 
and  exports  have  decreased,  and  in  consequence  of 
the  considerable  decrease  in  exports,  the  premium  on 
exchange  has  increased  from  150%  to  215%,  so  that 
today  the  value  of  $1.00  U.  S.  currency  in  terms  of 
Salvadorean  currency  is  $3.15  pesos. 

No  moratorium  has  been  decreed,  but  the  collec- 
tions of  bills  is  difficult  in  view  of  financial  condi- 
tions and  the  high  premium  exacted  for  gold 
remittances. 


28 


URUGUAY. 

The  Monetary  System  of  Uruguay  is  based  on  the 
gold  standard.  The  theoretical  unit  is  the  Uru- 
guayan PESO,  (gold)  divided  into  100  centesimos 
and  represents  1.697  grammes  of  gold  .917  fine,  or  say 
1.5561  grammes  of  pure  gold.  Its  par  value  in  terms 
of  U.  S.  currency  is  $1.0342  and  the  par  value  of  $1.00 
U.  S.  currency  in  terms  »of  Uruguayan  currency  is 
$0.96689  pesos. 

No  Uruguayan  gold  has  ever  been  coined  and  the 
circulation  consists  of  banknotes  and  foreign  gold 
coin,  which  are  legal  tender  at  the  following  rates 
established  by  the  Government: 

United  States _ -Eagle  $9.66  Pesos 

English Sovereign  4.70  " 

German _ 20  Marks  4.60  " 

French  20  Francs  3.73  " 

Belgium  20  Francs  3.73  " 

Italy  - 20  Lire  3.73  " 

Spanish    Doblon  4.82  " 

Brazil     ._ „ 20  Milreis  10.56  " 

'Argentine   $5.00  Pesos  4.66  " 

Uruguay  is  a  great  pastoral  country  and  the  chief 
exports  are  live-stock  products.  The  largest  single 
item  of  export  is  wool.  Owing  to  the  character  of 
her  export  products,  for  which  the  demand  is  world- 
wide, Uruguay  has  suffered  to  a  lesser  degree,  per- 
haps, from  adverse  war  conditions  than  any  of  the 
Latin- American  countries. 

Under  normal  conditions,  the  exchange  rates  in 
Montevideo  are  influenced  to  some  extent  by  those  of 
the  neighboring  Argentine  city  of  Buenos  Aires. 

EXCHANGE  RATES. 

Exchange  rates  are  quoted  normally  in  Monte- 
video as  hereunder  noted: 

London    :. 90  d/s  51   ll/16d=$1.00    Peso 

London    sight  50         %d=  1-00       " 

Paris     . 90  d/s  Frs.       5.42  J^      =  1.00        " 

Paris    sight  "          5.36^      =  LOO       " 

Berlin     _.... „  90  d/s  Mks.      4.41         =  LOO 

Berlin     _ _     sight  "         4.34         =1.00 

New  York  _     sight  $0.9730     =  LOO 

29 


VENEZUELA. 

The  Monetary  System  of  Venezuela  is  based  on 
the  gold  standard.  The  unit  is  the  BOLIVAR, 
divided  into  100  centimos,  and  weighs  0.32258 
grammes  of  gold  .900-fine,  or  say  0.29032  grammes 
of  pure  gold.  The  par  value  of  the  bolivar,  ex- 
pressed in  terms  of  U.  S.  currency  is  $0.19295,  and 
the  par  value  of  the  $1.00,U.  S.  currency,  in  terms 
of  Venezuelan  currency  is  B  5.18262.  The  actual 
currency  in  circulation  is  gold,  silver  and  banknotes. 

In  January,  1912,  the  Government  of  Venezuela 
issued  a  decree  fixing  the  value  of  the  foreign  gold 
coin  circulating  in  the  country  and  specifying  that 
public  offices  must  receive  and  pay  out  these  coins 
at  certain  fixed  rates,  prescribing  penalties  for  non- 
compliance with  the  terms  of  the  decree. 

Hereunder  the  terms  of  the  decree  in  question  are 
quoted : 

"The  following  tariff  values,  by  which  all  the  offices  or  institutions 
which  directly  or  indirectly  hold  or  receive  public  funds,  or  which  are 
the  object  of  any  prerogative  on  the  part  of  the  National  Government, 
will   receive  and  pay  for   gold  coins:" 

Bolivars 
20  Franc  piece  of  France,  Belgium,  Italy,  Switzerland,  (fractions 

in  proportion)    20.00 

English  Sovereign  or  £  Sterling  (Half-sovereign  in  proportion)        25.25 
Spanish  gold  onza,  onza  patriota,  Central  American  onza  of  any 

year,  Colombian   onza,  etc... _        80.00 

United  States  twenty-dollar  gold  piece  (fractions  in  proportion)     104.00 
German  double  crown  or  20  mark  piece  (fractions  in  proportion)        24.75 

Double  condors  of  Colombia  (fractions  in  proportion) 100.00 

Mexican  onza,  weighing  33.770  grammes  .875-fine  gold 100.00 

Spanish  Isabelina  of  25  pesetas    (fractions  in  proportion) 25.00 

The  principal  gold  in  circulation  is  Venezuelan 
gold  of  the  same  weight  and  fineness  as  that  of  the 
Latin  Monetary  Union.  After  Venezuelan  gold, 
probably  more  American  gold  is  in  circulation  in 
Venezuela  than  any  other  foreign  gold  coin. 
EXCHANGE   RATES. 

Hereunder  the  exchange  rates  as  normally  quoted 
in  Venezuela  are  noted: 

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90-DAY    BILLS. 

Pounds    Sterling B     25  to     25.10=  £1. 

Francs  B     99  to     99.50=Frs.    100 

Marks   B  122  to  122.50=Mks.  100 

CHECKS. 

Pounds    Sterling B     25.50  to     25.60=  £1. 

Francs B  100.50  to  101.50=Frs.  100 

Marks  B  124.75  to  125      =Mks.  100 

Lire    B  101.50  to  102.50=Lit.  100 

Pesetas    B     95.50  to     96.50=Pes.  100 

Florins,  on  Holland B       2.15  to  =Flr.  1. 

"    Curacao    B       2.20  to  '  =  "  1. 

American  gold  3-  days'  sight 

B  5.22  to  5.25=$1.00 

American  gold  60-days'   sight 

B  5.15    "    5.18=$1.00 

Since  the  war,  foreign  exchanges  have  advanced  in 
value  in  terms  of  Venezuelan  currency.  The  pres- 
ent rate  (May,  1915)  for  sight  drafts  on  New  York 
is  B  5.60  against  a  par  rate  of  B  5.18262,  which 
shows  a  premium  of  close  to  8%.  The  present  nomi- 
nal rate  for  £  Sterling  is  B  27.00  as  against  a  par 
rate  of  25.25  which  means  a  premium  over  par  of  7%, 
approximately. 


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